ZelnickMedia is bent on making the most of its Lillian Vernon Corp. acquisition. For one, the New York-based company aims to beef up the gifts cataloger’s business-to-business division. And after acquiring Time Life, the music and video direct marketing unit of the Time Inc. magazine division of Time Warner on Dec. 31, ZelnickMedia may leverage Lillian Vernon’s catalog experience to create a new Time Life catalog.
Backed by a private equity fund managed by New York-based Ripplewood Holdings, ZelnickMedia bought the $247.4 million Lillian Vernon in July 2003 for $60 million. By adding the Time Life unit to its stable, Direct Holdings Worldwide, the entity created by the partnership of ZelnickMedia and Ripplewood, will have annual sales exceeding $500 million.
Time Life discontinued a Time Life Music catalog this past summer to focus on selling its music, videos, and books on TV and online. In September it sold off its other catalog, Heartland Music, to Itasca, IL-based Infinity Resources. But Direct Holdings may relaunch a Time Life print book, says Zelnick-Media partner Jim Friedlich, “using the economics of scale and expertise that reside in the holding company.”
But while Direct Holdings would use the expertise and paper- and list-buying power of its Lillian Vernon operation, a Time Life title “wouldn’t be a Lillian Vernon-branded catalog,” Friedlich says.
Direct Holdings is taking a chance on the Alexandria, VA-based Time Life business. Time has spent the past year reviewing the lagging unit’s viability, as Time Life’s EBITDA has dropped by more than $54 million for the first three quarters of 2003 compared with the comparable period of 2002.
Back to business
Buying Time Life wasn’t Direct Holdings’ only focus in December. It also ordered a new business plan for Lillian Vernon’s corporate gifts division and brought in a consultant to oversee the initiative.
“We’re doing a formal business plan for that division,” says Lillian Vernon spokesperson David Hochberg. “We hadn’t been approaching the division in as analytical and methodical a way as [ZelnickMedia principal] Strauss Zelnick wants. Zelnick wants us to study what the best focus and emphasis should be going forward.”
Lillian Vernon currently doesn’t use a catalog to sell corporate gifts such as business-card cases, paperweights, and commuter mugs. The company sells the goods on a wholesale basis, and the sales account for a minimal portion of its overall revenue, Hochberg says.
But this isn’t the first time the mailer has sought to reinvigorate its b-to-b sales. The cataloger began wholesaling items such as accessories, Christmas ornaments, and lipstick holders to Max Factor, Elizabeth Arden, Revlon, and other manufacturers back in 1954 — just three years after it was founded.
Lillian Vernon developed the Provender corporate gifts wholesale catalog in 1978, but it got out of wholesaling in 1983, citing difficulties in collecting from retailers. Now look for the company to turn a new page in b-to-b. “We’ve been looking at Lands’ End’s corporate catalog — it’s a well-executed sales tool,” Hochberg says. “And Zelnick realizes the potential is greater in b-to-b for us.”